Ballot initiative seeks to fix Colorado school funding inadequacy

Initiative addresses 'upside down' tax code, Gallagher Amendment

Merino School District Superintendent Rob Sanders talks about the "Great Schools, Thriving Communities" ballot initiative that supporters are trying to get on the November election ballot to increase funding at a public meeting Tuesday at Sterling Public Library. (Callie Jones / Sterling Journal-Advocate)

A statewide initiative seeking to make its way onto the November 2018 election ballot has the potential to infuse $44 million into northeastern Colorado. RE-1 Valley Superintendent Dr. Jan DeLay, Buffalo (Merino) School District Superintendent Rob Sanders and Northeast Colorado BOCES director Bret Miles gave a presentation on Tuesday at Sterling Public Library about the "Great Schools, Thriving Communities" initiative and a new school finance formula that Colorado superintendents have submitted to the legislature.

DeLay reviewed how school districts are funded by state and local property tax. About 34 percent of RE-1's funding comes from local property taxes and 66 percent comes from the state, but that percentage varies by school district.

A chart from the "Great Schools, Thriving Communities" ballot initiative campaign shows Colorado's upside down tax code. Right now, wealthier individuals contribute less in state and local taxes. (Courtesy photo)

"Increased assessed evaluation from 1994 to 2007 has really reversed the amount of local property taxes and the amount the state has to pay to backfill that and it's created huge inequities," she said.

Over the last 10 years, RE-1 has lost over $15 million from the state, about the equivalent of a whole year's budget, due to the budget stabilization factor, a method the legislature used to reduce the Amendment 23-mandated increase in school funding. Merino has lost over $2 million.

DeLay shared a graphic showing how the state has gotten further away from the national average over the years. Colorado needs to spend between $2,000 and $2,800 more per pupil to meet the national average.

Advertisement

The new school finance formula superintendents have created would enable districts to not only make up for what's been lost due to the budget stabilization factor, but also add another $2 million for RE-1 alone.

Sanders, who helped come up with the new formula and the ballot initiative, spoke first about the ballot measure, Initiative 93.

"We know that if this thing passes, from Pawnee, to Wiggins, to Wray, to Julesburg, there will be $44 million infused into northeastern Colorado," he said.

A graphic from the "Great Schools, Thriving Communities" ballot initiative campaign shows how the initiative would fix Colorado's upside down tax code by increasing the portion of state and local taxes paid by wealthier individuals to be more in line with what the less wealthy pay. (Courtesy photo)

The initiative uses an income tax increase to solve the funding issue, because as Sanders explained, the Colorado Tax Code is backwards. "The less you make, the more percentage of your income goes to taxes in Colorado," Sanders said.

Those who have an income of $30,600 pay 8.7 percent to income taxes, but those who make $1,779,900 only pay 5.3 percent. With the proposal, that 5.3 percent would increase to 7.1 percent, while the 8.7 percent would stay the same.

The goal of the initiative is to raise revenue for education, distribute that revenue adequately and equitably and ensure local benefit and local control of revenue.

"If this passes 92 percent of Colorado will not pay a dime and 95 percent of Logan County citizens will not pay a dime on the income tax piece," Sanders said.

Bret Miles, executive director of Northeast Colorado BOCES, talks about the "Great Schools, Thriving Communities" statewide ballot initiative that supporters are trying to get on the November election ballot to increase school funding at a public meeting Tuesday. (Callie Jones / Sterling Journal-Advocate)

Those with taxable income of up to $150,000 won't see an increase; those making $150,001 to $200,000 will see an $81 increase; those making $300,001 to $500,000 will see a $3,456 increase and if you're a millionaire the average increase is about $42,000.

That generates about $1.6 billion in revenue for schools that will go into a separate account earmarked for education.

The ballot initiative also impacts the corporate income tax. Approximately 44 states levy a corporate income tax, with rates ranging from 3 to 12 percent. Colorado ranks third lowest of the 44 states; if this initiative passes it would rank ninth lowest.

Colorado assesses a 4.63 percent corporate tax on top of the federal tax, the initiative would increase that to 6 percent, with 1.37 percent being earmarked solely for education. This corporate tax does not apply to small businesses that are "S" corps, sole proprietors, or LLCs.

Even if this initiative passes, corporations would get a tax break. Currently C corps pay a federal tax rate of 35 percent, plus Colorado's 4.63 percent, for a total of 39.63 percent. If the initiative passes, next year under the federal plan, "C" corps federal tax rate drops to 21 percent, plus the 6 percent for state, for a total of 27 percent.

"We wanted to make it attractive to our farmers, our smaller business owners, our mom and pop shops," Sanders said, explaining with this initiative assessment rates would be permanently set for the purpose of education.

In 1982, when the Gallagher Amendment was passed, the assessment rate for commercial property was fixed at 29 percent, which is where it has remained since, while the rate for residential property went from 21 percent in 1982 to 10.36 percent in 1995 to 7.2 percent in 2018. In 2019, the assessed valuation for residential property is projected to drop to 6.1 percent, while commercial property will remain at 29 percent, but under this initiative the residential property valuation would be set at 7.0 percent and commercial property would be set at 24 percent.

"The bottom line here is we have an opportunity to fund education at the tune of $1.6 billion and it means about an additional $4.5 million for Sterling, it means $1.3 million for Merino, for us that's significant money," Sanders said.

Miles explained to get the initiative on the ballot over 90,000 signatures must be collected across the state by July. Also, 2 percent of all registered voters in each Senate district must sign petitions, which is approximately 3,000 signatures in Senate District 1, which includes about 50 schools.

"This is a worthwhile pursuit; it's a benefit for almost every person we know," Miles said.

Sanders noted the initiative is written in a way that if an adequate School Finance Act does not pass this does not go into effect. The goal of the new formula is to better prepare students for meeting graduation requirements and to be more equitable and adequate. With this new formula, DeLay estimates RE-1 would see about a $4 million increase in total program funding, and Sanders said Merino would see an increase of $1.2 million.

"It means a lot and that's why we're pushing this so hard," Sanders said, telling the audience those who worked on this formula didn't shoot for the moon. "We shot for just below average funding across the nation, so that we didn't have a sticker shock from taxpayers."

The bill for the new finance formula is in the House of Representatives Education Committee. According to Miles, at the end of the day there weren't enough votes to get it out of committee, so they laid it over with the strategy to go out and find those other votes or find that compromise that can get those votes, which is what they're doing right now.

"The beauty of the bill is we don't need the bill to get the funds to our school, but we need the ballot initiative to even have the bill make sense," he said, noting the bill can be run again next year if the ballot initiative passes.

Sanders encouraged teachers and school staff in the audience to help get the ballot initiative passed.

"It's imperative that we get it on the ballot and it's imperative that we do some education, because I'm telling you if this does not pass, the legislators tell us all the time they don't want to pass money for schools, people don't want to invest in schools," Sanders said.

Article Comments

We reserve the right to remove any comment that violates our ground rules, is spammy, NSFW, defamatory, rude, reckless to the community, etc.

We expect everyone to be respectful of other commenters. It's fine to have differences of opinion, but there's no need to act like a jerk.

Use your own words (don't copy and paste from elsewhere), be honest and don't pretend to be someone (or something) you're not.

Our commenting section is self-policing, so if you see a comment that violates our ground rules, flag it (mouse over to the far right of the commenter's name until you see the flag symbol and click that), then we'll review it.